Europe Summary and Highlights 25 October
Quiet Europe, with focus on U.S. data next week and then elections
European morning session
A quiet European morning saw USD/JPY gain 20 pips to 152.00 while the USD was marginally softer against the riskier currencies. EUR/USD was essentially unchanged over the session, but gained around 10 pips after the release of the German IFO survey and the Eurozone money data. The IFO survey showed modest gains in all the main indices, echoing the similar recovery seen in the German PMI indices on Thursday. Eurozone M3 was a little stronger than expected at 3.2% y/y. Most of the riskier currencies gained around 0.1% against the USD, but USD/CHF rose 10 pips and the scandis were little changed.
Asia Session
The Tokyo headline CPI for October has come in lower at 1.8% y/y. However, ex fresh food and energy CPi also rose to 1.8%. The mixed report will not derail BoJ's monetary policy as it suggest trend inflation is indeed higher. But with headline lower, the pace of further tightening may be slowed. We are hearing more verbal intervention and an escalator rhetoric from Mimiura, the vice finance minister of ministry, citing one sided and speculative moves. The September Service PMI remains high at 2.6% y/y. USD/JPY is 0.12% lower at 151.64 as the U.S. Treasury yields fall while JGB yields higher.
The risk sentiment is mixed on Friday’s Asia session as Chinese, Hong Kong and in the green while Japanese and U.S. three major equity indexes in the red. AUD/USD is trading 0.28% lower at 0.6621 after treating a session low at 0.6628, NZD/USD is 0.36% lower at 0.5993 while USD/CAD is unchanged. Else, EUR/USD is down 0.04% and GBP/USD is down 0.09%.